Today’s review is on the Transamerica Series B-Shares Variable Annuity. As the purpose of this review is to show you the strengths and weaknesses of this Annuity. So in order to make an informed decision, it is important to consider all available facts.
- Product type
- Investment options that are available and their realistic long-term investment return expectations
- How it can best help your financial plan
- How it’s most poorly used as part of your financial plan
Equitable Structure Capital Strategies Plus Annuity Quick Facts
|Product Name||Series B-Share|
|Type of Product||Variable Annuity|
|Standard & Poor’s Rating||“AA-” (Great)|
Before we go into detail, here is an important legal disclosure.
This review of Transamerica Series B-Shares Variable Annuity is an independent review at the request of readers. Intended to explain my perspective when breaking down the positives and negatives of this particular model annuity. As this is an independent product review, not a recommendation to buy or sell an annuity. Equitable has not endorsed this review in any way, nor do I receive any compensation for this review. Before purchasing any investment product be sure to do your own due diligence and consult a properly licensed professional, should you have specific questions related to your circumstances. This review is not intended to give specific advice and your adviser may know more about your circumstances to make an appropriate recommendation. All names, marks, and materials used for this review are property of their respective owners.
Before we go into the review, some information on Transamerica
The Transamerica Corporation is an American holding company for various life insurance companies and investment firms operating primarily in the United States, offering life and supplemental health insurance, investments, and retirement services. The company has major offices located in Baltimore, Maryland; Cedar Rapids, Iowa; Denver, Colorado; Norwood, Massachusetts; Exton, Pennsylvania; Harrison, New York; Johns Creek, Georgia; Plano, Texas; and St. Petersburg, Florida. Additional affiliated offices are located throughout the United States. In 1999, it became a subsidiary of Aegon, a European financial services company headquartered in The Hague, Netherlands.
Transamerica funds the Transamerica Institute, a nonprofit foundation that comprises the Transamerica Center for Retirement Studies and the Transamerica Center for Health Studies.
There are a few ways that Agents might pitch Transamerica Series B-Shares Variable Annuity
- Lifetime Income/withdrawals
- Low Fee Annuity
How does Transamerica Series B-Shares Really Work?
As I mentioned in our last review, I’m going to be reviewing what might very possibly be the highest variable annuities in the marketplace. Last review we saw how that annuity can easily take from you between 8-10% in fees from your money. As now today we are going to see the difference between the last annuity review and the Transamerica B-Shares Variable Annuity, in case there is one.
This variable annuity works similarly to Transamerica Principium III, with one of the differences being the surrender period. Transamerica Series B-Share has a surrender period of 7 years.
When it comes to income riders, they are the same for all variable annuities in Transamerica Corporation.
Transamerica Series B-Shares Fee Breakdown:
Surrender Charge Fees:
|Surender Charge %||8%||8%||7%||6%||5%||4%||3%||0%|
|Fee Types||Series B-Shares|
|Mortality & Expense + Admin Fee + $50||1.15%|
|Return of Premium Fee||1.30%|
|Retirement Income Choice Benefit Rider (Income Edge)||2.50%|
|Retirement Income Max Rider||2.50%|
|Retirement Income Choice Benefit Rider 1.6||2.50%|
|Based Death Benefit (optional with retirement income choice)||0.50%-0.55%|
|Income Enhancement (optional with retirement income choice)||0.45%-0.65%|
|Additional Death Benefit Rider (optional)||0.25%-0.55%|
|Return of Premium Rider (optional)||0.20%|
|Fund Fees||0.44% – 1.48%|
|Fund Facilitation Fee||0.30%|
|Aprox. Current Fees without riders||4.95%|
|Aprox. Current Fees with riders||9.00%-10.00%+|
We previously reviewed the Transamerica Principium III variable annuity, we concluded that it was one of the highest fee variable annuities in the marketplace, however, it was because we didn’t know the facts about this one. It looks like all Transamerica Variable Products are super high fees, so don’t panic if you currently have a product with this company, We Can Help You! Contact an expert that might find a solution to your situation.
After reviewing the fees for this annuity, we can conclude that this annuity overcame our last annuity review, which as we saw it was something really difficult to do. Just imagine buying this annuity with the standard fees and no riders. If you bought a 100k contract you will be depleting your account your earnings, if any at all, by $5,000 a year. That means that this annuity with the standards fees would have to net more than 5% per year in order for you to preserve your capital. Furthermore, in case you choose any of the living benefits or death benefit riders you will have to pay 7 to 10% in fees per year.
In summary, it does not matter what angle you look at it, this variable annuity as all Transamerica variable annuities are a Huge Mistake to make to any person out there.
In any case you want to verify the information provided in this review, here I leave you a link to the prospectus, so you can check for yourself the fees that involves buying this annuity.
Investments for Transamerica Series B-Shares Variable Annuity
This annuity offers a variety of funds for you to choose from, from U.S Equity, Fixed Income and International Funds to Asset Allocation and Hybrid Allocation funds. However, if you choose the living benefits riders, your options will be narrow down to 3 groups, Group A, B and C, which each have their own allocation funds in it. Remember that in case you choose any of the living benefits you will have to pay the 2.50% fixed fee plus the fund fees which can add up to 2.00% more in fees.
If you want to know more about the investment option performances for this annuity click here!
Transamerica Series B-Shares Variable Annuity Riders
Retirement Income Choice 1.6
This income rider allows you to growth and protect your income base regardless of market conditions, however it comes with a high fee. What it basically does it to promise your lifetime income as long as you don’t exceed your withdrawal percentage. This rider as most income rider in simple words, is going to allow you deplete all your money to then give your lifetime income.
Transamerica Income Edge
This rider will allow you to take withdrawal only when your account value is depleted to zero. In case you should the automatic step-up, you will increase the withdrawal on each rider anniversary, but it will cause the fee to increase as well.
Retirement Income Max
This rider will offer you the possibility to have lifetime income as long as your account value is reduced to zero regardless of any market returns. Also, they say it gives you the possibility of growth if you don’t take income, but as we’ve been seen in this review, what growth can give you this annuity with a 9-10% fee? It would have to net more than 12% so you can keep up with inflation. Also, there’s the option to step-up the withdrawal base on each rider anniversary, but this would increase your fee on this rider.
Guaranteed Principal Solution
This rider will “guaranteed” a future value date, meaning 10 years after you select this rider, your policy will equal your guaranteed future value and after that date, the guaranteed value equals zero. It also gives you a guaranteed minimum withdrawal regardless of your policy value. Under this rider the insurance company will account for the withdrawal you take by applying two different withdrawals guarantees: 1) Principal back, for withdrawals up to 7% your total base, or 2) For Life, for withdrawals up to 5% of your total withdrawal base.
Enhanced Death Benefit Riders
Additional Death Distribution (ADD)
This rider pays you an additional amount on based on rider earnings if any, however it is only available after 75 years old and if you buy the Return of Premium and Annual Step-up death benefit rider.
Additional Death Distribution + (ADD+)
This rider is supposed to pay an additional amount based on the benefit base, when a death benefit is payable during the accumulation phase, meaning that if the person dies during the accumulation phase the death benefit will be equal to the premiums paid minus any withdrawals. This rider is only available after 75 years old.
This rider will allow you to liquidate your annuity without any penalty but it has an added fee of 0.50%.
This Annuity works Best:
- Highest Fees in the marketplace
- Free surrender rider.
- Tax-deferred growth.
- For those looking for lifetime income
- For those looking to deplete their money in record times
This Annuity Works Worst:
- For those looking for low fees
- Those who need liquidity.
- Wealth preservation and protection
As I said in the last review the purpose of this annuity is to deplete your account value, with the excuse of offering you the choice of buying an income rider that will promise you lifetime withdrawals/income, with super high fee. So, it is basically like selling your soul to the devil to live a good life on earth but then spend your after life in hell.
The only way that this annuity will serve you is that you want to have lifetime income. But understanding that your money is going to be depleted along the years, so in case you purchased this annuity, you have to understand that you have to be in it for life, if you suddenly decide to surrender your contract, most probably you wont have not even half of your starting account value.
I’m not suggesting that you should buy this annuity for lifetime income. But I’m just saying that this would be the only case this annuity could work. However, nowadays you don’t have to buy an annuity to have a lifetime income. So sometimes there are other ways to receive income from your money while at the same time preserving your capital. Thus leaving money for your relatives as legacy. Don’t get scared by sale agents that tell you an annuity is the safest way to leave preserve your capital, because it is not. Hence there are other ways and the person that tells you this is because they just want the commission that comes with the sale of that product.
Nevertheless, annuities might as well have a place in your portfolio. Not in every case but it can be used strategically for a small portion of your money. And this is why is important before taking a decision on whether to buy or not an annuity. So do your research and consult with Certified Financial Planner that put your interest in front of his. So you can hopefully retire with peace of mind.